FREIGHT FOCUS - Caught in a Sea Change
While traditional debt financing in the shipping industry exceed UD$ 500 billion during peak years of the cycle, the collapse of freight rates and problems inherent to the banking system post Lehman have brought a greatly diminished appetite for banks to keep providing debt financing to the shipping industry. Basil Karatzas in the maiden issue of Freight Focus argues that in the future shipowners will have to explore shipping finance sources outside traditional sources. Access the whole article here.
TANKER OPERATOR - 'Tanker Leading' Thoughts on OSG's Demise
OSG deemed to be a 'market leader' in shipping industry a few short years ago, but presently the company under Chapter 11 reorganization. Basil Karatzas ponders on the condition of 'market followers' under the present state of industry. Access the whole article here.
LLOYD's LIST - Going Around in Circles
OCTOBER 10, 2012
Private equity funds have been looking for investment opportunities in the shipping industry either by direct shipping asset acquisitions or by providing equity (and mezz, 'junior equity', etc) into 'legacy transactions.' Despite their deep pockets, great appetite and thorough industry analysis, PE funds are still of their investment targets in shipping. Basil Karatzas in this article in the Lloyd's List argues that not all hope is lost. Access the whole article here.
THE BALTIC EXCHANGE - Vessel Value
Reporting market transactions for the purpose of establishing an index, such as LIBOR, may have its own inherent conflicts. Reporting vessel sales in market reports or providing assessments for the Baltic Exchange Sale & Purchase Assessment (BSPA) index may also not be accurate, although the potential for conflicts is much lower than other markets argues Basil Karatzas in the Summer 2012 issue of the office magazine for the Baltic Exchange. Access the whole article here.
TANKER OPERATOR - Tanker Prices in a Declining Trend
A review of sale & purchase of market transactions and price trending in the May 2012 issue of the Tanker Operator presented by Basil Karatzas & Karatzas Marine Advisors & Co. Access the whole article here.
MARINE MONEY - Valuation Models: A Practical Appraisals
While great effort has been expended in the last years for preparing in-depth algorithm-based vessels valuations, Basil Karatzas with Professors A. G. Merikas from the University of Piraeus and Wolfgang Drobetz of the University of Hamburg and Dr Christos Sigalas argue that regression analysis may not always be the appropriate methodology for valuation of shipping assets. Access the whole article here.
TANKER OPERATOR - The 'Long Arm' of the Shipping's Invisible Hand
While some decisions in the market place are politically charged, such as the approval and construction of the Keystone XL pipeline, complimentary industries or certain market segments may benefit preferentially from the outcome of any decision. Basil Karatzas argues that eventual cancellation of plans for building Keystone XL may benefit tankers loading from the West Coast of Canada with Far East discharge port destinations. Access the whole article here.
MARITIME EXECUTIVE - What's A Ship Worth
With the market in turmoil, the question of what's the value of a vessel becomes even more relevant: shipping debt financing is predominantly asset-backed, and thus the value of the collateral is not a purely 'academic' exercise; on the other hand, when the market is admittedly illiquid and rather dominated by the 'weaker hands' that have to sell, the question of the value and of the valuation methodology suddenly realizes a higher degree of importance. Access the whole article here.
THE JOURNAL OF EQUIPMENT LEASE FINANCING - A Primer on Leasing Transactions in the International Maritime Sector
Abundant liquidity and availability of credit, as well as high freight rates, made leasing (especially in the form of 'sale & leaseback transactions') an appealing alternative for shipowners to sell shipping assets at prevailing high asset prices while taking the vessels back for long-term employment. Although equipment leasing is an established method of financing in many industries, in shipping with its special types of employment (bareboat charter vs. 'triple net' lease vs. financial lease) leasing requires a great degree of faith and understanding of the industry and its drivers. Access the whole article here.
MARINE MONEY - Surviving the Shipping Cycle: The Shipbroker's Perspective
While freight rates were skyrocket high, many financial players entered the market for the first time. While the market was in a precipitous fall, many of these players ended up standing alone with no much shipping market experience or expertise by their side, which complicated an already bad situation. This shipbroker's advice has been to work strategically and closely with their clients and resolved problems collectively and from a standpoint of trust for symbiotic success and exceptional differentiation of their services in the market place. Access the whole article here.
LLOYD'S SHIPPING ECONOMIST - Multiplying EBIDTAs in Shipping
A topical evaluation of the market place and the best asset classes for investment based on undertaking an EBITDA multiple analysis across representative asset classes.Access the whole article here.
MARINE MONEY - Risk Management
Shipping is a very volatile industry with many variables involved; there is market exposure risk and credit risk and operational risk and ... Given that shipping is one the industries closest to what economics professors call 'perfect competition', surviving and succeeding in shipping is about managing a risk portfolio and choosing one's poison what are best suited or equipped or prepared to handle better than the competition in the long term. A interesting primer on the risks involved with running a shipping company. Access full article here.